Since working longer is the key to a secure retirement for the vast majority of older Americans, it’s useful to take a look at labor force trends for men under and over 65 for the last century or so. (The focus is on men because women’s patterns reflect both their increasing labor force participation over time as well as their shifting retirement behavior.) The labor force participation of men both 55-64 and 65 and over has gradually increased. Many factors help explain this turnaround.
Social Security: Changes to Social Security made work more attractive relative to retirement.
Pension type: The shift from defined benefit to 401(k) plans eliminated built-in incentives to retire.
Education: People with more education work longer than those with less.
Improved health and longevity. Life expectancy for men at 65 has increased about 3.5 years since 1980.
Less physically demanding jobs: With the shift away from manufacturing, jobs now involve more knowledge-based activities, which put less strain on older bodies.
Joint decisionmaking. More women are working, wives on average are three years younger than their husband, and husbands and wives like to coordinate their retirement.
Decline of retiree health insurance. Combine the decline of employer-provided retiree health insurance with the rapid rise in health care costs, and workers have a strong incentive to keep working and maintain their employer’s health coverage until they qualify for Medicare at 65.
Non-pecuniary factors. Older workers tend to be among the more educated, the healthiest, and the wealthiest.
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